Simple Steps to Repairing Credit

You may feel that it's impossible to achieve a better credit rating. But even if you have a low score now, simple steps can improve your rating and put you in a better credit category. Think of the benefits of a good credit rating -- better interest rates on loans, easy approvals and a sense of accomplishment.

Don't Apply for Credit Accounts

The less inquiries you have on your credit file, the better. Credit checks are part of the application process, and each time you complete a credit or loan application, you can expect the lender to pull your report. While inquiries are necessary to determine if you qualify for financing, credit checks do hurt your credit rating and will erase points from your score. Put off applying for credit accounts until you have improved your rating, and even then, only get new credit accounts when necessary.

Avoid Delinquencies

Delinquent accounts contribute to a poor credit rating. But you can fix these accounts and improve your rating by getting on the phone and contacting your creditors. Express your plans to bring past due accounts current and set up a payment plan. Develop a routine of always paying your credit cards and loan payments on time each month. You can't repair the damage of bad credit in days or weeks. But if you continually forward payments on time, your personal credit rating will slowly improve.

Keep Personal Debts Low

There are dangers to excessive credit card debt. Credit card companies routinely report your balances to the credit bureaus, and keeping your balances close to your credit limit reduces your credit rating. Expanding the gap and paying down your balances is another key aspect of repairing a poor credit rating. Keep balances below 30 percent of the given credit limit. For example, if your credit card company gives you a $1,000 limit, charges on the credit card should not exceed $300.

Obtain Credit Reports

Checking your credit report with each of the three credit bureaus (Experian, TransUnion and Equifax) keeps you aware of your credit file. Information on your credit report affects your credit score, and if some of the information is inaccurate, your personal score may suffer. Checking reports are simple, and you can order them online once a year from Annual Credit Report.